This is why there's a spike in infection rate among older people, and why hep C is considered a looming cost crisis for Medicare -- we don't yet know the full extent of the infectious disaster that was unscreened blood, but it's ticking away inside anyone who received a transfusion prior to 1992.
Copenhagen theory of ethics:
If person A ignores a problem, but person B comes up with an expensive solution to the problem, person B is the monster because he should have come up with a cheap solution. Person A is completely innocent.
(Obviously this is nuts.)
Obviously you'd have to spend a while funding both R&D and Medicaid/etc, while the new drugs are in development and the old ones are still under patent, and I'm sure there's other details I've missed, but it seems like there should be some way to make the system make more sense.
I won't try to rehash all of the permutations of ways that might work (just search HN for any discussion of drug companies and patents and you will be able to enumerate them). I suspect that there are ways to improve the present system substantially, but I concede that the problem is much harder than I can solve. Hopefully someone will be able to do it some day.
How does it work in European countries where health care is (mostly) paid for by the government? Do these companies still charge the same prices as in the US?
The majority of global R&D happens in the US market, even though the entire world benefits from it. So pharmaceutical companies have come to expect to recoup their R&D costs from the US market. Ultimately, this means that European markets benefit from the research without having to shoulder the bulk of the costs from it.
If they couldn't do that here, then yes, they might adjust their business models and try and charge more in Europe and India. But as mentioned above, India doesn't recognize patents, and since the R&D isn't taking place in Europe, there's less of a need to charge the same prices there. And because there isn't one single European market, its more complicated to price drugs there in such a way as to reliably turn a profit (after accounting for R&D) in each individual country than it is in the US, where insurance players are licensed by state but the pharmaceutical market is otherwise roughly uniform across all 50 states.
Companies charge as much as they can, they don't follow some altruistic "we love Europe" plan.
I understand your point though: Of course it's easier to bask in American exceptionalism than facing the truth that corporations rule the US and the only human value they are interested in is the amount of dollars extractable through any means imaginable.
Nobody said anything about altruism, or 'loving Europe'. I don't know where you're getting either of those ideas from.
> Of course it's easier to bask in American exceptionalism
This is hardly a claim of American exceptionalism. It's a non-normative observation about the existing structure of the markets. It is not a statement that this is how it always must be, or that this is how it should be. It is merely a description of what currently is.
Sadly for these companies, and fortunate for the vast majority of Australians, it is so popular and successful that any attempt to undermine it puts the government at risk of being turfed out in the next general election.
The Abbott government tried to force through a hair-brained GP co-payment and it was so unpopular that even when it was scrapped they eventually had to replace the Treasurer and Prime Minister for fear of being routed in the next general election.
There was a lot of posturing and complaining by pharmaceutical companies in the U.S. and the U.S. Government tried to heavy the Indian Government, but to no
When it became apparent that the Indians weren't going to budge, and with a growing realisation that other nations would ether do the same thing or import their drugs from India, the companies agreed to drastically reduce their prices on "humanitarian" grounds. Now they still make massive profits, just they are less massive than they once were.
This is now happening with academic research.
Nobody will shed any tears because greedy multinationals make a lower profit to ensure less people die from disease. Nobody will weep over Elsevier's reduced earning if it frees up necessary information and research findings so science can progress for the benefit of all mankind.
The entrenched interests of rich, arrogant corporate executives and business owners in first world nations are finally being disrupted by poorer nations who don't care about this group of people. But that's what happens when you gain an attitude on I weaning entitlement - you eventually overreach so far you come undone, and nobody feels any sympathy when it happens.
This not to mention all the extra capital needed to fund research into all of the drugs that never make it to market before a company finds something that works.
It's a pretty gross abuse of the original idea of patents.
Now, figure out what the correct dose is, how to get it into a mammal so that it's not metabolized into uselessness, how much you can safely give the mammal.
Now, start again with humans and hope you don't get to the final stage only to find out that it's not as effective as existing treatments or has side effects that will open you up to lawsuits.
Finally, once you've done all that, scale out the production of your compound such that you can prove that every dose meets FDA quality requirements.
Don't oversimplify things like this, there are lots of situations you aren't thinking about..
He's just staying that a lot of Hep C care is taxpayer funded, and that Gilead is therefore price gouging the American taxpayer. That your dad is also being price gouged, over in Europe, is just icing on the cake.
As in: the idea behind capitalism (the reason we put up with it) is not that price-gouging is some fundamental right we should worship, but because capitalism works. What's that mean? It efficiently allocates resources. How does it efficiently allocate resources? By letting a fluid market with many competing buyers and sellers figure out an appropriate price.
Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.
I don't know what the best alternative is, but I'm convinced that there are many trivially better solutions to allocating resources to medical research, efficacy testing and production than what we're doing now. Every social network, things like google's pagerank, scientific journal impact ratings - all represent alternative means to determine worth in a competitive fashion; and even competition isn't strictly necessary - for some scenarios plain old raw computation to solve for the optimal solution may be possible nowadays. We're not even trying to improve the status quo.
I don't think it is appropriate to compare a drug company that created a life-saving drug to a hostage taker. And in this scenario it is particularly inappropriate, because they are charging less for the drug than the previous best treatments cost!
Furthermore, there is an alternative here. The patent only covers this one cure. You are welcome to go out and spend $2-3 billion to try to create your own drug. (But that would be pretty risky, wouldn't it? And good luck raising the money if you plan on giving the drug away.)
However, that does not mean that they (or some other organization) couldn't have developed this drug for less.
The question isn't whether it's better that what came before, the question is whether it's efficient. If there were many buyers and sellers, you'd have some faith that is at least approximately efficient.
But with just one seller, they could recoup their costs many, many times over. That's terribly inefficient - those resources could be better used elsewhere.
And it's quite a bit worse than that - by being so inefficient, you're creating all kinds of perverse incentives. Instead of trying to find and create a worthwhile drug, the aim is to find those drugs with captive audiences. The Martin Shkreli saga illustrates that quite blatantly.
The appropriate benchmark is efficiency, not whether the drug at the offered price is better than nothing.
1. A drug company can charge whatever it wants for a drug until some predefined multiple of the cost of developing the drug is recovered.
2. After that point, the patent expires and its up to the free market to determine prices.
Set the multiple of R&D costs high enough that it allows for the low success rate of drug research, and you have a model that still encourages risk taking whilst preventing profiteering.
Also, this proposal means that while the patent is not expired, production is still monopolized.
And there is the issue of testing vs. research. There is an argument to be made that drug development isn't the hard part (or at least not always). The hard part is figuring out how to use the drug, and doing clinical trials to prove efficacy and safety.
E.g. we currently live in the wonky situation where there is little incentive to discover new uses for existing out-of-patent drugs. It's much more worthwhile to find a new drug that does the same thing.
I think patents-as-monopolies are a bad idea. A citation-based subsidy and/or fixed license fee, preferably on a decreasing schedule with a capped or only slowly growing integral would align motives with outcomes more clearly.
I mean, I don't see the problem if research becomes independently specialized from exploitation.
Would doing that put an end to commercial drug development? Or would commercial drug makers continue to seek treatments where they saw opportunities to profit?
Sofosbuvir is a really great test of how we reason about this stuff. The price is high and easy to balk at, but it's cheaper and better than the previous treatment. Cheaper and better are clearly compatible with the profit motive. So we are left with our intuition that the price is unfairly high. I think part of the answer is to look at how medical payments are structured.
Capitalism allocates resources efficiently without external forces like patents. Patents are a fix to force capitalism to be more socially responsible with sharing of knowledge.
United States: 698
(2) The article claims Harvoni was acquired. That is not really true. Sovaldi (sofosbuvir) came from the Pharmasset acquisition. Harvoni is a combination of sofosbuvir with ledipasvir, a drug discovered at Gilead.
The combination of the two is a key part of the treatment; sofosbuvir was still taken with interferon (and ribavirin) for genotype 1 HCV, the most common form.
Treatment for genotype 1 HCV, without interferon required ledipasvir. The notion that Gilead contributed nothing scientifically to Harvoni is false; they provided a crucial component to the all-oral treatment of HCV genotype 1.
This is a fantastic point. I remember when Gilead announced their acquisition of Pharmasset. They were ridiculed in the press. How could they be so stupid to pay that much? Many people thought that $11B was as good as gone.
That's the risk involved with drug development. It's like VCs, you spend a ton of money on a lot of investments, most of which fail. Unless you get a few huge winners, it's not a feasible business.
In the modern world, it's not ideal to create a drug to cure something. Once people are cured they no longer need your drug. That's why we have so many drugs like Lipitor and Viagra that treat symptoms but do not cure.
The "problem" with Sovaldi/Harvoni is that the patient only takes it for ~90 days, and then they're cured.
The drugs are cheaper than regular treatment of Hep C - which ends in liver transplant. Do people think the price tag was just random? No, it's because this is a price at which the taxpayer saves money by curing the disease vs. blood transfusions, liver transplants, lost economic value, etc.
Not to mention that the waitlist for a liver transplant is getting halved as we cure Hep C.
As we slam Gilead the other really evil pharma companies like Pfizer are taking notes and patting themselves on the back for creating drugs whose end goal is to addict the consumer.
Another side conversation that's interesting, is who takes the $84k hit. There's sound logic that it's cheaper to give the drug NOW vs paying for surgery LATER... but what if i'm not your insurer when you need it. With obamacare, you can't be denied because of pre-existing conditions... so it's interesting math.
If they aren't very high, the US government could start making the company look like jerks by offering $50 billion for the patent. I'm pretty sure they would be able to calculate a nice return based on a payment like that.
The math works fine for that, there's ~3 million people just in the US to treat, paying $50 billion would save a substantial amount just treating those patients. Of course, we don't run our government based on math that makes sense, so it's a pipe dream.
Pretend you were in charge of Medicare/Medicaid. The NPV of the lifetime care cost of the HepC symptoms of each HepC patient on your rolls is $X. You want to encourage someone to develop a cure for HepC, so you put out a price bid for what you will pay someone who shows up with a cure. What price do you offer?
What price do you offer for someone who shows up with a cure?
I don't think that's a reasonable conclusion at all. One of the main reasons we have so many drugs that treat symptoms is because cures are absurdly difficult to find while treatments can be found accidentally (Viagra was originally intended to treat hypertension).
Funding research into cures is funding your own bankruptcy. Pfizer execs would jump a the opportunity for "Pfizer" to be the name of the company that cured cancer. But the reality is, hunting for cures is expensive with little chance of payoff. That's not how you stay in business.
The drug companies produce the drugs they can. They are nervous enough about having enough blockbusters in their upcoming pipeline that if they could make something that cures a given cancer, they would.
We've eaten the low-hanging fruit. If any of us went back in time a hundred years we could come up with a polio vaccine just by trying a few times to remember what we learned about it in grade school. Modern diseases that don't have a cure in a pill isn't because someone never thought of doing it; it's because it takes hundreds of scientists doing lots of long trials to find something that improves outcomes by 10%.
What if western governments stop enforcing drug development intellectual rights? Not going to happen before hell freezes over, but let's have a short thought experiment.
Quality health care for all would probably blossom thanks to more access to affordable drugs than ever. Drug development would probably slow down significantly without compensating measures. But would that be so bad? Medical research is increasingly a game of diminishing returns... Many but the rarest disease puzzles have been solved already. And the huge profit margins show the current drug development system has proven inefficient handling these rare corner cases. Think https://en.wikipedia.org/wiki/Alexion_Pharmaceuticals . With more patents starting to expire, the existing drug development model will only get more inefficient...
Aren't there more efficient ways to incentivise drug research?
Crazy idea... Bootstrap an open source drug with maecenate and/or public funding, or market an existing generic with a sympathetic history. Make it super easy for people to donate something extra on top of the drug price. Think a tip at the pharmacy, directly to the researcher's drug development budget. Their drug cured them or their loved ones! Put a picture of the research team on the packaging. Show people these researchers are heroes.
No new drugs. Pretty simple.
Now you ask, is that a bad thing? well yes, yes it is. Right now, we are running out of (or have run out of) top end antibiotics.
Partly from over use (I'm looking at you America.) mostly from using them to get much higher yields in farm animals (yup, thats right, last line antibiotics are being used on pigs, so they can be packed in much higher densities. )
So what I hear you say? Well TB thats what. There is a resurgence in TB, the white death. Now, you might be content with each lung collapsed in turn, in a vein attempt to cure it. However I'm not.
1 in 3 people get cancer. The survival rates are not good. Loads of people are diabetic. (mainly because they eat shit and are fat(unless its type1 which is genetic))
Opensource model is just bollocks. I don't want to be treated by some drug thats only had patchy test coverage. I don't want to be beholden to some amateur who thought it'd be good to reinvent for the billions time penicillin.
Who is going to pay for the time? its not like you can provide charge for support is it?
No, the way forward is actually having a proper handle on insurance. Here in the UK, drugs are purchased nationally but more importantly you only pay a nominal upfront fee. Its not more expensive, in fact its hovering around 6% of GDP compared to 18% for the US (and with much better care too)
I doubt that. There's no reason why the same research couldn't be academic research.
Global spending on drugs research is only $77 billion a year. Take the 20 richest countries in the world and that's less than $4 billion a year each. That's less than half the UK's EU rebate.
(EDIT: not enough coffee to add correctly)
How to prevent them from spreading their new diseases to the rest of the world?
Let's follow the advise from their next president and put a wall around their country.
If that's true then this problem will resolve itself in a decade or so when these drugs go off patent.
On the other hand, if enough people exploit loopholes like this, and the pharma company actually felt a significant drain in revenue, they may decide not to license the manufacture of these drugs in India at lower prices. If $84,000 seems unreasonably high in the US, imagine how out of reach it will be in India, where the cost of living is much lower.
But not for a customer who is literally dying to take advantage of that same "global market" to save himself?
Like everything else in the global economy, laws are only enforced to protect the strong against the weak, and yet we wonder how all the wealth is accumulating in the hands of the few.
That makes sense. It is interesting that when usually there are "anti-globalization" protests shown in the media, the protesters are presented as fringe idiots, violent, with facemasks and so on. Sort of implying "look at these crazies not wanting countries get close to each other, trade and be friends". The truth is globalization is overloaded to apply only to large companies. And usually the more they "globalize" -- the more they create inequality and pain for those at the bottom. So then they also end up increasing border controls, formulate various laws and agreements and ram those through each country's legislature to protect segmentation and control of market.
We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.
This opens up a counterargument that it should just as equally be virtuous to purchase medication from places where the retail price is cheaper due to more lax or nonexistent laws protecting intellectual property claims in pharmaceuticals, by which process consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.
After all, protection of workers, protection of the environment and protection of intellectual property are all sliding-scale values; if it's fair for one person to do arbitrage on one of these in order to make money, why shouldn't it be fair for another person to do arbitrage on another?
I don't think this is entirely fair. Some of the lower cost can surely be attributed to lower cost of living in those locations, not necessarily due to more lenient laws.
In that case, it isn't comparable to arbitrage over IP.
I wonder what the rate of mass suicide is in general for "all 50 states of the United States" vs Chinese companies like Foxconn.
Didn't happen at Foxconn. They were all on separate days over a few years. Not sure where you got "mass suicide" from. It's not mentioned in the comment you refer to.
So, yes, that's unusually bad with not many in the U.S. that can compare. I'll be interested if you know any companies in the U.S. where over ten people have jumped off one roof with company installing safety nets.
This actually has more odds of happening.
I've been inside Chinese factories and they seem just like factories anywhere else. Americans need to stop imagining China as some giant North Korean slave camp. It's got very low unemployment, a huge middle class and quite reasonable working hours, pay and job mobility, especially for young people like those Foxconn workers. Health and safety is a wash though but that's another matter.
Of course, China could always reduce their media censorship so we can get honest coverage of everything. Then, we might know more. :)
The whole medical system in US is broken. This morning I had a strange thought... I need to prepare for trips to US the same way I'd prepare for going to a third-world country: by buying a special medical insurance! It's one of the important TODO items when going to certain countries.
Fun fact: I can get a medical insurance that covers US with deductibles in low hundreds of dollars by doubling my not-so-high premium. As an expat. How crazy it is that I can get a better deal on insurance in US than local people?
If it were legal in the US, no in-patient care insurance would be pretty cheap as well. I'll agree not as cheap as ex-US, but a hell of a cheaper than Obamacare plans.
Regarding US share of research funding versus the rest of the world, this is well established... Public funding and private profits are the two big US sources of medical research dollars. The NE Journal of Medicine reports that the US funds about half of all global medical research spending, and that's split approximately evenly between public and private funding.
Here's  a CBO paper on the topic of pharma R&D spending / reinvestment which is also worth a look. R&D as a percentage of sales ("research intensity") is higher in pharma than almost any other industry, and increased significantly in the 80s and has held constant since then.
 - https://www.cbo.gov/sites/default/files/109th-congress-2005-...
(Upvoted, just out of the feeling of irritation at this.)
Important to note is that that profit margin is after taking into account that pharmaceutical companies spend more on advertising than they do on research. How about we just take out the profit margin, take out the advertising and give the money directly to universities who already do a lot of the research and then make the results freely available? That way US citizens on HN will still be able to feel superior about subsidising the healthcare of the 'entire world' and everyone will have access to low cost generics.
"5 percent of the United States is the world's population and consumes 75 percent of the the world's prescription drugs."
(And by "Americans" I and the gov included all those people in the US market who are not "US citizens". Ie me.)
I am ok with that. They can take even more taxes out every month if it means people get access to better healthcare.
By the way pharmaceutical companies also free ride on public universities. Research is often done there. Even if it is from grants, it often means professors end up working and spending their time for pharma companies instead of doing other things like teaching students.
Moreover, if our goal is to win hearts and minds and I don't know, promote Democracy (at least that is what the propaganda tells us), isn't providing health saving medication or building hospitals or schools working towards that goal better than say overthrowing their government or threatening to invade.
Going back to Western Europe, I hear it is already possibly to go to Germany (or was it Norway) and attend a 4 year university there for free. Isn't that free riding So they can have our pills and we can go there and not pay $200k in student loans. Globalization and free markets, we learned that was a good thing, right ...
It's time to reign in patent protections, specifically regarding extension patents, and bring in compulsory license maximums for prescription medicines. Give drug companies 5 years exclusivity once they react market... after that they can only charge X per day for licensing... imho that should probably be $10/day/prescription, and drop every year.
Patent protections, in this case, and many others actually exceed the value they provide to larger society, so I'm in favor of limiting them in this case as opposed to removing them entirely. I understand there are a great amount of expense, but that is usually recouped within 3-5 years, and often in medication less than that.
Earlier competition will lead to better pricing structures that are less restrictive over marginalized costs. In effect benefitting consumers.
The key point in the constitution behind copyright and patents are "limited" exclusivity... those limits don't always have to be larger... sometimes they need to be smaller, and some industries aren't the same as others.
Free ride? You think pharmaceutical companies just come along and pluck the best drugs for free? No, they out-license it from the university and pay royalties.
How else would Northwestern University build a brand new chemistry building from their Lyrica royalties?
So nice for them to be able to pick and choose the successful research while not having to absorb all the other, less interesting research funded with public money.
Complaining that drug companies are free-riding on public research is like complaining that the local 7-11 is free-riding on the public safety provided by police officers.
First off, no, marketing is not where most of the money is spent. Second, marketing spend has a positive ROI, so they get more money back than they spent.
Lastly, this entire discussion is about a wonder drug that cures a terrible disease and you claim most new drugs are minor tweaks.
Or are you claiming that Europe isn't meaningfully free-riding simply because new drug development just isn't valuable, and we'd be better off with much less drug research? I think that's a defensible claim, but it's very contentious and should be stated clearly if you believe it.
We'll get endless varieties of new opioids, blood pressure pills, pecker perkers, and not much else.
What econ doesn't teach is that people are not perfectly rational creatures. Just like we will find people who will write code for free, who will make music for free, there will always be people who are searching for cures for the sake of searching for cures.
I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.
No matter how altruistic you are, as a private company you can't put billions of dollars toward a drug that's going to lose money.
>I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.
... which they would not have done without the expectation of a profit.
That said, I don't disagree that money is the only motivator. However, good intentions aren't enough to develop a new drug. It takes a hell of a lot of money as well.
If you don't create incentives for private investment, then you need to get that money somewhere else.
And then India can purchase/void their domestic patent, allowing generic brands to fill the market the original creator decided to abandon.
Should Americans pay for a disproportionate share of pharma revenue? I for one am so happy for all the medical research that we fund in this country, it is probably the best thing we can possibly do for the world. Of all the American foreign aid and foreign intervention, very little else will compare to the amazing impact of widespread access to Harvoni/Sovaldi in India. That is truly an amazing gift that America is giving to India, and it's made possible exactly by extreme price discrimination.
This is an amazing miracle cure for a deadly disease. My understanding is that it cost a lot of money to develop, and took a lot highly skilled work, and involved a fair measure of risk of total loss. We want wins like this to be rewarded. We want a significant fraction of the dollars this drug earns to ultimately be re-invested in more of this kind of R&D. We definitely want more drugs like Harvoni/Solvaldi coming to market.
So the conflict I have is, when manufacturing is not the bottleneck, you want to get this cure out to people everywhere, but at the same time you can't afford to pay for it all to happen in one year. So you see cases like OP where they won't pay for the treatment until you are showing symptoms. But the cure is so easy, nobody wants to wait for symptoms, and how can you blame them?
It can be solved by extending patents in return for lower prices. Then the government must enforce patents internationally by putting pressure on countries that ignore patents.
Another concern is poor quality from knockoff manufacturers. You can partially solve that by lowering costs because the original product becomes more competitive. You can also try to apply pressure on countries that don't honor patents.
You can complain about the cost, but you can't just make pharma companies sell their products for less because you believe they are too expensive. You need to give them a reason to believe that they can continue to sell a good product and make money off of the research investment they put in. You also need to give them incentive not to make small changes to drugs to renew patents when the original version of the drug might be a better version.
Granted, it is sick when people make an excessive amount of money at the expense of those most in need. But, most of the bad that happens in pharma is due to suboptimal patents and suboptimal patent enforcement.
One of the reasons why generic drugs prices jumped so much in the last few years, if because manufacturers said "screw this" and just stopped making the drugs because the margins were so low.
Without competition, you get inflated pricing.
I'm guessing somehow both formulae are covered by the renewed patent, but that is wrong on so many levels.
But thats the thing. There will be no drain in revenue as they make money in the US by selling for $84K while they make money from the sales in India as well due to licensing agreement (albeit a bit less revenue).
Overall, still a pretty good deal for these pharma companies if you ask me otherwise why would they even do such a deal with India ?
At the end of the day, you need to give smart people a reason to make their lives' work saving lives instead of selling financial products or advertising algorithms. That's not going to happen if going into drug development means topping out at GS-15 in a government lab.
Maximizing rent-seeking doesn't seem like the wisest course of action.
It is absolutely reprehensible behavior. If $1,500 is a reasonable price point and profit margin for a company elsewhere in the world then $84K in another part is simply outrageous.
As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing. In fact, your financing example cuts the other way. That $33k new car is actually worth more like $40k to the buyer, because that's how much they pay after financing it. The market shows that people value an average new car at > $40k. So how is it unreasonable to say that the value of a Hep-C cure is at least $84k?
> It is absolutely reprehensible behavior.
Gilead is saving lives. Apple is making money hand over first selling shiny trinkets that nobody really needs. Which is the reprehensible one? What you're basically saying is that a company should make less money for creating products that fundamentally help humanity. That's crazy!
People should be able to get these drugs, even if they can't afford it. That's the difference between iPhones and Sovaldi. But it's the government's job to make that happen--the companies shouldn't be forced to basically be private charities.
Meanwhile, Apple is selling luxury products that people can buy if they would like to. And those that can't, survive just fine without one.
It's not like Sovaldi grows on trees, free for the picking, and Gilead came along and fenced-in the trees and now is charging $84,000 for access. It created a cure to what used to be a terminal disease. It should be rewarded in proportion to the value of curing the disease.
Creating the cure was admirable, what it has done with it is reprehensible. It certainly has the right to make a significant profit. But a monopoly on medicine paid for by dying people with no other options does not accurately establish the value of curing the disease.
So the moral impact of a company's actions depends not on the net good done by that company, but on the "pretenses" it does or does not put on? It's morally better to waste natural resources on frivolities like new iPhones every year, instead of saving some lives (but not all)?
And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.
No, the decision to make billions extra in profits on top of the billions they would already be making at the cost of millions of lives is still definitely more reprehensible than someone spending a few hundred dollars more than they otherwise would on an essential device that provides information, communication and entertainment instead of giving it to someone less fortunate.
If it's reprehensible to have the means to save a life and not do so, then Apple and its customers are reprehensible. This is the natural consequence of your reasoning. The only distinction you can make between Gilead and Apple is that Gilead invented the means of saving lives, while Apple would have to pay someone else to do so. But how on earth does that count against Gilead? Why is Gilead evil for making profits when they could save lives by giving away Sovaldi, when Apple could just as easily save lives by buying Sovaldi for those who need it?
 It costs about $3,300 to save a life from malaria: http://www.techinsider.io/the-worlds-best-charity-can-save-a....
 It costs $4,200 to save a child by investing in childhood health: https://www.sciencedaily.com/releases/2015/07/150703072652.h....
If this were a free market system where competition has resulted in $84k being the price at which it makes sense to produce then so be it. Instead, the company can lobby to make sure the government, who we both agree should be involved here for the public good, never gets involved and buy out any company that challenges its monopoly. Then, it can take advantage of global markets for additional profits, while the people who are actually dying can't and have two options - death or debt.
I honestly can't tell if you're being sarcastic or not. I hope so...
Why are you dragging iphones and Apple into this? You are way off point.
"the companies shouldn't be forced to basically be private charities." Wow, I don't anybody has ever compared a big pharma company to a private charity before. I had to reread that sentence twice.
How about Martin Shkreli the CEO of Turing Pharmaceuticals who overnight raised the price of an AIDS drug from $13.50 to $750.00 a pill overnight? Is that OK? He shouldn't in your words "be forced to basically be private charity" right?
When interest on mortgages shrinks the house prices will become inflated. In fact it's smarter to buy a house durng a time of high interest at 400k and later refinance with a lower interest rate than to buy the same house for 800k at a low interest rate without posibility of even cheaper refinancing.
Remember they paid $11B for the right to the drug and they still had to bring it through development.
I'm also in the US. Why is my experience so much different than yours?
(edit: some punctuation)
On the other hand, it's likely that better treatments for your condition are developed in the future and at that point you will complain about how expensive those new drugs are.
But, it's important not to confuse what are actually two different inquiries: what is the fair price for a Hep-C cure, and how do we make sure those who need get it. The first is a purely economic question, not a moral one. Otherwise you create a perverse incentive structure: people make lots of money creating things people don't need (a new iPhone model every year), while people make much less money creating things people do need (breakthrough cures).
Medicine in the US is wwaaaaaaaaaaay overpriced. Things that are critical for life needs to be priced at a reasonable flat rate above costs, and conducted with the attitude of public service and human actualization. Let big pharma reap their R&D costs some other way
That's easy: they'll just cut R&D and manufacture generics or toothpaste or something that is cheaper.
How?! You think they should create a social network for doctors? A billion dollars in ad sales is somehow morally better than a billion dollars from saving lives? They're making their money by saving lives, and being criticized for it. You're effectively saying that they shouldn't do any R&D, like the Indian generic drug companies.
Sorry for the exclamation points. I think that you have a particular system of morality, that is more important than saving lives. To me this is like arguing for abstinence-only sex education, which demonstrably does not work. I wish in general people would be more willing to look at data and outcomes.
* massive step up in grant funding to front-load R&D costs so they're paid by the time the drug is out, or
* worldwide medical R&D fund, bounties for individual re-searchable issues, or
* move private R&D to universities, have profits gained pay back R&D, send any extras to researchers, and shutter R&D aspect of private medicine
At least I'm trying to think of alternatives, and not just trying to shoot other commenters down
I think your ideas should be implemented first in another country, such as India or somewhere in Europe, so that we can see how well they work before throwing away the baby in the bathwater. Personally, I would prefer more gradual changes here in the US. For example, the cost of running drug trials has been increasing. Big pharma companies like this; going through the drug trial obstacle course is their specialty, and the huge barrier means that small drug companies that do the pre-trial drug research have to go through the big companies to get to market. Reducing these costs would lead to more competition.
Economically crushing people (and removing them from normal economic activity by way of crushing debt) hurts the entire economy except for the pharma industry.
The better question is what are insurance companies actually paying and how much should they have to pay? And then we get to the actual reason the drug is priced so high... it's because it is actually less expensive per cured human than all the alternatives. At $84k, this drug is actually saving insurance companies money per-cure.
The problem is that the cure is so damn good that everyone wants it right away, where-as the previous choices sucked badly so only a small percentage of the inflicted even went for it. Exactly how the OP describes, the cure is so good and so free of side-effects, patients want it even before they are showing symptoms of the disease! Of course the insurance companies can't afford to cure the planet of HepC all in one year -- there has to be a way to spread the (lower) cost over time.
Yes I believe studying, working, getting ahead ought to give me and my family a better life. Else what's the point? Its not just a game with points; its survival. Its supposed to work that way. If money doesn't buy the most important things, then we need some new system of exchange that does buy important things.
But again, this is not what we're debating. It's why the "average car price" does not apply.
On a grand scale it's socialized medicine but even on a smaller scale it's health insurance. And it's why hospitals don't kick out a dying person just because they're destitute. What we're talking about isn't "why does medicine X cost $Y?" Most people understand that.
And that's why it's unfair to compare life-saving medication to buying a luxury vehicle.
There's still lots of room for a policy discussion. Can we develop such cures and pay less for them?
I'm not entirely familiar with what makes pharma patents that much different from software (you don't really have a monopoly even if you own a software patent), but that's basically what's happening.
Once a company gets a patent, free market rules no longer apply, and they are free to price their drugs as they want.
If that is true, VC's money will be flooding over pharmaceuticals instead of Silicon valley. This "100x" number probably fails to account for the vast number of failed trials that is all cost and no profit.
Drug development is incredibly difficult -- for very good reasons. The FDA has to be risk-averse in order to protect the health of the public and to prevent harm to be done.
As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.
Edit: Just a reminder that eminent domain requires paying the property owner. https://en.m.wikipedia.org/wiki/Just_compensation
Now why would they do that? Well, they expect that they'll give a company $500M and it will turn into $2B or $3B. However, most of those companies will fail and the $500M will turn into $0.
So that would mean that the returns on the drugs that are successful need to be really high. What if they weren't? Well, all that private money would dry up pretty dam quickly.
Look at the money going into cancer research. It's a huge amount every year. It's not just because cancer is a terrible disease and affects everyone, it's because the returns on cancer therapy are high.
You could just tell private companies, "stuff it, you don't get to make money" and try and have the gov't do it on their own. Of course you'd need to increase the NIH budget by what? 10x?
Our current system isn't perfect, but it does a dam good job aligning the incentives of people with money and people who need new drugs.
Eminent domain requires "just compensation" that courts interpret as fair market value. Since the company that created the drug was recently acquired there's a really easy number to put on it.
From that perspective, $84k per life saved doesn't sound that unreasonable, and creates a huge incentive to develop similar drugs in the future.
But I don't think valuing every life at $84k would be sustainable. And why should the drug company itself get to determine the price, with no upper bound?
Because they took the financial risk to develop the drug.
The only reason we have this crazy system is because people refuse to put an economic value on life.
Then nobody would buy it and they would lose their investment.
> force the government to pay it
They can't force the government to do anything. Of course, the government can just take the pills from them, but if they did that, then no more cures would be developed.
> people refuse to put an economic value on life
People do all the time. Every time you (and everyone else) make a decision of risk vs cost vs utility, you do. For example, some cars are safer than others. How does that influence what you'll pay for a car?
Anything with that phrase in it inevitably leads to major problems, along with other phrases like "zero tolerance" and "safety always comes first".
There seems to be a common misunderstanding of how eminent domain works. The Constitution requires "just compensation", which the courts interpret as fair market value.
Also, there are many, many ways the government can take things without just compensation. For example, civil asset forfeiture. They could get the patent declared invalid. Laws and regulations are very complex, there are a lot of levers the government can pull.
Considering the lives at stake, intentionally paying 20% more than the estimated value would be a better deal than the current system.
Suppose a cure for Alzheimer's never happens because price controls were put on the Hep C cure? Are you willing to risk it?
The price will come down after the patent expires. People are better off with a high priced cure than no cure.
You haven't met the scientists I've met then.
When you're working at a start-up and have options for a few hundred basis point of equity, you can be dam sure they are profit motivated.
However, the founders of those startups are rewarded handsomely for their effort, assuming they are successful.
Yeah, but, as your own link notes, courts (and the constitution) require fair market value for compensation. This doesn't save you any money at all; eminent domain can only have an impact when someone is refusing to sell at the market price. But Gilead is very very happy to sell at the market price. The issue is people upset at what that market price is.
If the US government could come up with the fair market value of the exclusive rights to manufacture Harvoni and Sovaldi, the problem wouldn't exist, because the same amount of money could also just buy all the doses of Harvoni and Sovaldi on the open market.
> As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.
Oh sure, they'd love for the US government to buy a million doses at $84k each and start handing them out. I don't think that solves any problems though.
Edit: Wait, or is your comment actually just an argument for single payer healthcare, and I'm just being obtuse? If so, my apologies for missing the joke, and I think you're right: The most obvious role for the government is funding universal catastrophic care, and I think this should be a part of that.
It's different from the government buying individual doses on the market because the current price is set to achieve the fair market value of the drug by treating a small subset of infected patients. Manufacturing costs are so small in comparison, we could treat everyone for nearly the same price.
"You can cure cancer with those three drugs? Was going to make tens of billions? Here you go: guarantee of tens of billions of subsidies over next 20 years in exchange for the patent and license for anyone to produce it generically."
Boom! Tens of thousands of lives saved a year. Way better than investing into the TSA. :)
Unless by "we" you mean "the wealthy" and "the public" you mean "the poor", in which case the increased tax that has to be set up for that will just be reverted into the cost of the service/good provided by the wealthy, the wages of their employers, or turn into capital flight, and so forth. In short, you're basically taking money from other areas of people's lives and making them put it into health care. Which could be achieved by themselves by saving, if that's what they wanted to do.
In this specific case, it's the public paying money to private parties for their property to move into public hands. Then, that public property is manufactured to be distributed to the many, private parties in need that constitute the general public.